Could your next break up save you thousands?

The most common question I’m asked by friends these days is “Does it make sense for me to break my mortgage?”. With record breaking low interest rates it is worth crunching the numbers. On top of interest savings, it can be a way to free up cash flow, or you may want to refinance to consolidate other debt, or extend your amortization to lower your monthly payments. Another important thing to consider is what interest rates will be when it is time to renew. 

Breakup costs can vary dramatically depending on your mortgage:

Fixed vs variable rate – penalties on fixed rate mortgages can be shockingly steep. In many cases the penalty essentially offsets the interest savings.
Your current interest rate – the larger the gap between your contract rate and current rates the higher the penalty.
Time remaining in your term – fewer month equals smaller penalty 
How much you still owe – a larger balance equals a higher penalty

Does the interest rate savings offset the prepayment penalty, administration, appraisal and reinvestment fees? Even if it’s a wash you may decide that it’s still worth it to free up cash flow, consolidate debt or reduce your monthly payments or lock in a lower interest rate for a longer term.  

If you’d like me to crunch the numbers to see if breaking your mortgage makes sense please reach out to me at jenniferb@seatoskymortgages.com or call or text 604 905 9790.